The South African Revenue Service (SARS) has joined 48 countries in cracking down on people who use crypto assets to dodge taxes and launder money.
The 48 jurisdictions, including South Africa, pledged to adopt a new Crypto-Asset Reporting Framework (CARF) developed by the OECD and put it into law.
The CARF is a new international standard on automatic exchange of information between tax authorities.
According to the OECD, the emergence of crypto assets is a major development in the global tax space.
These assets can be transferred and held without interacting with traditional financial intermediaries or any central administrator having full visibility.
The lack of transparency makes it challenging for tax authorities to gain insight into crypto transactions or the location of crypto assets.
“These developments have reduced tax administrations’ visibility on tax-relevant activities carried out within the sector,” the OECD said.
Therefore, the rise in cryptocurrencies and NFTs poses a significant risk to recent gains in global tax transparency.
The CARF was signed off in March 2023. Last week, the 48 countries adopting the standard set a 2027 deadline for implementing it in their laws.
South Africa’s exchanges are already required to register for licences with the Financial Sector Conduct Authority before the end of 2023.
Many of them are optimistic about that development. They argue regulatory oversight will increase public trust in crypto.
SARS said that, as a jurisdiction that plays host to an active crypto market, it intends to work towards swiftly transposing the CARF into domestic law.
It will also activate crypto exchange agreements in time for exchanges to commence by 2027, subject to national legislative procedures.